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Incapacity to work - what can employers do?

Employers are often frustrated by employees' incapacity to work for health reasons. In an attempt to protect employee interests, legal regulations provide certain restrictions on what employers can do if an employee is unable to work for health reasons. A recent Supreme Court decision has further clarified some of these restrictions.

Sick leave

The first option for employees who are incapable of working for health reasons is sick leave, which must be established and ordered by the employee's doctor and certified with a medical certificate. In Hungary, employees are entitled to 15 days' paid sick leave per calendar year. If an employment contract is established or terminated during a given calendar year, the employee is entitled to sick leave proportionately. During said 15-day period, the employee is exempt from performing work, but the employer must pay 70% of the employee's absence fee. Sick leave may be divided into several parts, as necessary.

Employees who are unfit for work for a longer than 15 days can remain on sick leave and are entitled to receive a sickness benefit from the state social security system. This benefit corresponds to 60% of the employee's average income in the preceding 180-day period, with a specific daily cap.

The most important employment law consequence of sick leave is that employees on sick leave enjoy limited protection from dismissal. Under the previous Labour Code (in force until 2012), employers could not dismiss employees on sick leave and employees often misused sick leave to protect themselves from unwanted dismissal. Contrary to the previous Labour Code, the existing code allows employers to dismiss employees on sick leave, but provides that the notice period can start only when the employee returns from sick leave.

Employers must order employees to undergo extraordinary medical examinations when they return from long-term sick leave (ie, sick leave exceeding 30 days). The aim of this examination is to establish whether the employee is still fit for the job.

Consequences

If, as a result of the abovementioned medical examination or any other interim examination, the employee is restricted in his or her capacity to undertake the work required for a specific position for health reasons, the employer can:

offer the employee another position that he or she is capable of performing;

exempt the employee from performing the work in question; or

terminate the employment contract with notice.

Offering another position

In practice, there is often ambiguity as to what extent employers must offer other positions to employees who become unfit to perform the work required under their employment contract. Notably, there is no general legal obligation for employers in such cases to maintain the contract and thus offer a new position to the employee. However, such a legal obligation does exist in the case of specific employee groups, such as workers of a 'protected age' (ie, five years before retirement) or pregnant women.

In the case of employees of a 'protected age', employers must offer an open position that is available at the employee's place of work and suitable for him or her in terms of the skills, education and experience required in his or her previous job. The employment terms for the new position, including the salary, may be different. The employer can terminate the employment lawfully only if no other position exists or the employee has refused to accept such position.

Exemption from work

If an employee is unfit to perform a job for health reasons this is an objective hindrance and the employer cannot employ him or her in the given position. In such cases, if the employer does not wish to terminate the employment contract, the employee must be exempted from work.

In a recent case heard by several courts, the Supreme Court ruled that an employee's incapacity to perform work in a given position does not in itself constitute a circumstance that would automatically render the maintenance of the employment relationship impossible. It is therefore up to the employer to decide whether to:

offer the employee another position;

assign the employee to another position or employer temporarily;

terminate the employment contract; or

exempt the employee from work.

In the disputed case, the employer decided not to terminate the employment relationship and paid no compensation.

According to the court, if an employer decides to maintain an employment relationship, it must employ the worker in another role. If an employer cannot employ the worker in the given position, the employee is entitled to receive a payment for downtime that is equivalent to his or her base wage. The court considered that the situation in this case was similar to that where an employer cannot give tasks to an employee due to operational reasons. In such cases, the employer must also pay the employee for his or her downtime.

It follows from this decision that maintaining an employment relationship where an employee cannot perform work may be reasonable only in cases where the employer expects future vacancies or other employment opportunities.

Termination of employment contract

In court practice, an employee's incapacity to perform work is considered a valid and sufficient ground for dismissal. However, before terminating an employment contract for incapacity, the employee's medical condition must be assessed by a doctor and the incapacity must be clearly stated in a medical certificate. In the absence of medical certification, the dismissal can be declared unlawful. As noted above, additional protective rules may apply for certain employee groups.

In summary, employers must act with care when addressing situations involving an employee's incapacity to work for health reasons. Although employers enjoy some freedom when deciding the future of these relationships, it is important that they sufficiently document their decision-making process and the employee's medical status.

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